5 ms·

Ah this old pre-existing condition scam.

tptacek 3y ago
It's a fundamental problem with insurance: if you don't control for continuous coverage, rational customers will free-ride by paying (in this case, for the more expensive coverage) only when they know they're going to use it.
- leereeves 3y ago
  But they had Medicare Advantage plans, they weren't free-riding. They were, perhaps, deceived by the Medicare Advantage insurers.
  - tptacek 3y ago
    We're talking about why preexisting conditions screens happen in underwriting Medigap.
    - leereeves 3y ago
      Which doesn't explain why insurance companies are allowed to charge more for preexisting conditions in this situation, even though they aren't generally allowed to.
      - tptacek 3y ago
        They are. Try to buy insurance outside of open enrollment without a qualifying life event; you can, but only from insurers who underwrite against preexisting conditions. That's for the same reason: because otherwise, people would just forego insurance until they needed it.
        burnerthrow008 3y ago
        It’s also the reason for the coverage mandate (and penalty “tax”) under Obamacare. (I’m sure you know that, but replying here because it makes the thread cleaner)
        thriftwy 3y ago
        Wouldn't that be the rational approach? Otherwise, insurance is still a tax on young and fit to finance the medical treatment of the old and unfit. At which point it's socialism but less efficient. It's like if your car insurance covered getting a new one if the old one is at EOL. Imagine a cost of that and also the level of willingness to participate by the ones who just bought their first car with cash. Congratulations to the US people for discovering a model less efficient than socialism.
        beaeglebeached 3y ago
        At the youngest adult ages that contribute most to premium reductions productivity is largely a function of investment of the parent, so it may be even more dire than you phrase it. Its effectively a transfer of wealth of investment from parents who have just spent 18 years producing a taxpayer to unhealthy non-parents who comparatively took little of the risk and cost but equally gobble up gains to the risk pool. Another words, it is a regressive tax that rewards goading others into taking on parental responsibilities while taking on none yourself.
        mindslight 3y ago
        You're spot on, but it's even worse than that - since these pools are administered/owned by private companies, their incentive is to collect money from people while they're young and healthy, only to push them out once they're no longer young and healthy! I'd say that any sensible reform must intrinsically be based on some combination of a whole-society pool and individual payers. These highly broken approaches of provider networks and custom negotiated pricing need to be completely eliminated. Insurance should then be an optional thing only meant for people who prefer to financialize their life (like pet insurance), and should cover a formulaic amount of any bill from any licensed provider.
- mindslight 3y ago
  It's nowhere near as much of a problem when there can be a specific cause of loss with a well-defined date. I'd say the fundamental problem is that healthcare consumption doesn't really lend itself to being insurable due to this and a few other qualities. So as the government keeps pushing more nonsensical top-down policies trying to make healthcare fit into an inappropriate model, the market gets ever more distorted and the perverse incentives continue to grow.
- fnordpiglet 3y ago
  That’s not the preexisting condition scam, that’s the rationale behind enrollment periods. The pre existing condition scam is where you can’t change your insurance because you’re a human being and therefore experience poor health at some point. The rationale for the scam is they don’t want to insure people known to need care, and by denying coverage to people who experience being human, they can improve their profits by eliminating humans requiring care from their premium pool. Except that’s not how insurance is supposed to work. If everyone is assured the ability to buy into the pool the pools premiums are supportive of everyone, even humans. The issue though is we allow nonhumans like MBAs and accountants to decide who gets health care and who doesn’t.
  - libraryatnight 3y ago
    [flagged]
  - beaeglebeached 3y ago
    The way insurance is supposed to work is by people pooling risk to mitigate rare or unexpected losses into predictable ones. What you characterize as profit is rational acts of individual actors to join a risk pool similar to theirs in cost per unit risk. Only a lunatic would agree to buy into insurance pool that charges similar premiums for wildly different known risks. You are asking people to do the insane.
    - thriftwy 3y ago
      The whole idea of medical insurance is insane. It is OK for scheduled issues but not for covering shots to the moon. Like, I have a voluntary insurance for my children which covers periodic health checks and doctor appointments and maybe even ambulances, but it definitely does not cover surgery. That's what state medicine is for.
    - oktoberpaard 3y ago
      That’s where regulation comes in. In my country it’s mandatory for every citizen to have a base insurance package and it’s mandatory for every insurance company to accept every individual for that same base package, regardless of preexisting conditions. The minimum contents of the base package are determined by the government, the prices and extras are up to the insurance companies to decide. Every calendar year people are allowed to switch to a different insurance company, or make changes to their add-on packages and options, forcing the companies to compete while being able to lock in their clients for a year for some predictiveness. In effect that means that everyone is insured against rare and expensive diseases, while still keeping it relatively affordable, because the pool also includes healthy individuals with extremely low risk profiles. Add-on packages don’t have to follow the same rules, but the base package makes sure that people won’t go into massive debt for being unlucky, which is in my opinion essential for a humane society, no matter how this problem is solved, whether it’s commercial like here, or public like elsewhere. If all is left to the market without regulation, those benefits are lost. Some people might call that freedom, but I disagree.

It's a fundamental problem with insurance: if you don't control for continuous coverage, rational customers will free-ride by paying (in this case, for the more expensive coverage) only when they know they're going to use it.

leereeves 3y ago
But they had Medicare Advantage plans, they weren't free-riding. They were, perhaps, deceived by the Medicare Advantage insurers.
- tptacek 3y ago
  We're talking about why preexisting conditions screens happen in underwriting Medigap.
  - leereeves 3y ago
    Which doesn't explain why insurance companies are allowed to charge more for preexisting conditions in this situation, even though they aren't generally allowed to.
    - tptacek 3y ago
      They are. Try to buy insurance outside of open enrollment without a qualifying life event; you can, but only from insurers who underwrite against preexisting conditions. That's for the same reason: because otherwise, people would just forego insurance until they needed it.
      - burnerthrow008 3y ago
        It’s also the reason for the coverage mandate (and penalty “tax”) under Obamacare. (I’m sure you know that, but replying here because it makes the thread cleaner)
      - thriftwy 3y ago
        Wouldn't that be the rational approach? Otherwise, insurance is still a tax on young and fit to finance the medical treatment of the old and unfit. At which point it's socialism but less efficient. It's like if your car insurance covered getting a new one if the old one is at EOL. Imagine a cost of that and also the level of willingness to participate by the ones who just bought their first car with cash. Congratulations to the US people for discovering a model less efficient than socialism.
        beaeglebeached 3y ago
        At the youngest adult ages that contribute most to premium reductions productivity is largely a function of investment of the parent, so it may be even more dire than you phrase it. Its effectively a transfer of wealth of investment from parents who have just spent 18 years producing a taxpayer to unhealthy non-parents who comparatively took little of the risk and cost but equally gobble up gains to the risk pool. Another words, it is a regressive tax that rewards goading others into taking on parental responsibilities while taking on none yourself.
        mindslight 3y ago
        You're spot on, but it's even worse than that - since these pools are administered/owned by private companies, their incentive is to collect money from people while they're young and healthy, only to push them out once they're no longer young and healthy! I'd say that any sensible reform must intrinsically be based on some combination of a whole-society pool and individual payers. These highly broken approaches of provider networks and custom negotiated pricing need to be completely eliminated. Insurance should then be an optional thing only meant for people who prefer to financialize their life (like pet insurance), and should cover a formulaic amount of any bill from any licensed provider.
mindslight 3y ago
It's nowhere near as much of a problem when there can be a specific cause of loss with a well-defined date. I'd say the fundamental problem is that healthcare consumption doesn't really lend itself to being insurable due to this and a few other qualities. So as the government keeps pushing more nonsensical top-down policies trying to make healthcare fit into an inappropriate model, the market gets ever more distorted and the perverse incentives continue to grow.
fnordpiglet 3y ago
That’s not the preexisting condition scam, that’s the rationale behind enrollment periods. The pre existing condition scam is where you can’t change your insurance because you’re a human being and therefore experience poor health at some point. The rationale for the scam is they don’t want to insure people known to need care, and by denying coverage to people who experience being human, they can improve their profits by eliminating humans requiring care from their premium pool. Except that’s not how insurance is supposed to work. If everyone is assured the ability to buy into the pool the pools premiums are supportive of everyone, even humans. The issue though is we allow nonhumans like MBAs and accountants to decide who gets health care and who doesn’t.
- libraryatnight 3y ago
  [flagged]
- beaeglebeached 3y ago
  The way insurance is supposed to work is by people pooling risk to mitigate rare or unexpected losses into predictable ones. What you characterize as profit is rational acts of individual actors to join a risk pool similar to theirs in cost per unit risk. Only a lunatic would agree to buy into insurance pool that charges similar premiums for wildly different known risks. You are asking people to do the insane.
  - thriftwy 3y ago
    The whole idea of medical insurance is insane. It is OK for scheduled issues but not for covering shots to the moon. Like, I have a voluntary insurance for my children which covers periodic health checks and doctor appointments and maybe even ambulances, but it definitely does not cover surgery. That's what state medicine is for.
  - oktoberpaard 3y ago
    That’s where regulation comes in. In my country it’s mandatory for every citizen to have a base insurance package and it’s mandatory for every insurance company to accept every individual for that same base package, regardless of preexisting conditions. The minimum contents of the base package are determined by the government, the prices and extras are up to the insurance companies to decide. Every calendar year people are allowed to switch to a different insurance company, or make changes to their add-on packages and options, forcing the companies to compete while being able to lock in their clients for a year for some predictiveness. In effect that means that everyone is insured against rare and expensive diseases, while still keeping it relatively affordable, because the pool also includes healthy individuals with extremely low risk profiles. Add-on packages don’t have to follow the same rules, but the base package makes sure that people won’t go into massive debt for being unlucky, which is in my opinion essential for a humane society, no matter how this problem is solved, whether it’s commercial like here, or public like elsewhere. If all is left to the market without regulation, those benefits are lost. Some people might call that freedom, but I disagree.